Thanks for your reply. I am confident that the growth rate will not be less than 8% this year and will be more in the coming years. The inflation may not come back to the 3% levels but 5-6% is definitely possible.
As far as the crude price, nobody knows where it will go. When the dollar rupee exchange rate was around Rs39/= just a few months ago, the economists were forecasting that it will go up to 35 levels. Sadly, for them atleast, it had gone down to 41.50 now. Now the talks are about when it will reach 45/=. The same economists are forecasting the crude to touch $150. Even one had said that it may even touch $200.
When the rupee appreciated there was a hue and cry that the RBI should not have allowed it to go up as it affects the export oriented industries like technology, textiles and Pharma. Now when the valuation is going down the talks are concentrated about the import cost of crude. It is natural that the exports will get affected when rupee appreciates and imports gets affected when it depreciates. I do not know what we expect the RBI to do. There is a
which feels that the growth should be given priority and inflation should be allowed to go up. Another section says that inflation is to be controlled at the cost of growth. The RBI seems to do a balancing act, the best it can do.
I am not anywhere near to you as regard to the knowledge in economics. But I dont think that the crude is expected to touch 150 levels and even if so it may not sustain. It may hover around 120-130 levels for some time. But once the $600 billion speculative money starts to exit, it may even come down to sub 100. As I have repeatedly saying, the commodity bubble is surviving due to the big time speculators. They are searching for the alternative.
Once they find the alternative, the bubble will crash.
More over there are some sectors, the growth of which cannot be contained in any circumstances as far as our country is concerned. Even in a bull market not all the sectors go up uniformly. Sectors like oil and gas, power and infra are the most essential and bound to grow. If one finds good stocks in these sectors at reasonable prices there is no need to worry. I do not know anything significant about global economy, inflation, stagflation, recession, credit crisis, crude prices, FED policy, etc, etc. Even who knows well about it are unable to forecast what is going to happen. Atleast their predictions failed miserably not only many a times and most of the times. It was sub prime which was the topic for the month of march. Now all the economists are saying that the credit crisis is gone. The most talked about recession is also gone. Now they say the growth will be slow. If they cannot forecast or predict what is going to happen in the next few months how will they be able to predict what is going to happen in a few years from now.
To invest in the market, I feel that we need to know only one thing. That is about the business we are investing in. Instead of analysing the unforecastables it is better to analyse the business and business alone. To do that, what one needs to know is not economics but a cart load of common sense and plenty of patience. Nothing more and nothing less.
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